The venture secondaries market has been on the same roller coaster ride as the broader VC market over the past few years. However, given the tightening requirements of both institutional and individual investors and a shift in investor preferences towards more sustainable businesses, it looks poised to break away in 2023. This will be aided by new investment platforms that focus strictly on secondary investing and technology startups that are able to leverage data analytics and artificial intelligence to become smarter businesses.
The primary and secondary markets have always been a hotbed for venture capitalists, but in 2021 they entered the space in a big way as crossover investors. At first the market was booming as many companies were looking for outside investment. However, by 2022 the volume had decreased as companies raised more money from traditional VCs instead of from new entrants to the space.
2016 was an odd year for venture capitalists. Transactions decreased by 30% from the previous year, but data collected by the National Venture Capital Association (NVCA) shows that returns on investment (ROI) actually decreased as well. Many observers attribute this trend to saturation in the market and pessimism among investors, though others maintain that a lack of good investments are to blame. Whatever the case may be, secondary deals—which make up a significant portion of overall venture capital—seemed to stabilize in late 2022 and early 2023. Many analysts anticipate that transactions will resume their upward trend in 2024, signaling an optimistic future for venture capitalists.
